By: Laurie Valentine- CFO and Trust Counsel
A charitable remainder unitrust (“CRUT”) is legacy giving plan that provides you and/or other family members a potentially growing distribution stream during the term of the trust, with the remainder set up to benefit one or more charities at the end of the trust term.
You set up a CRUT by creating an irrevocable trust and transferring cash, appreciated securities or real estate to it. The CRUT will pay you and/or others an amount each year equal to the payment rate designated in the trust agreement multiplied by the value of the trust assets, as revalued on January 1 each year. The minimum payment rate is 5%.
The trust term can be for the lives of the non-charitable “income” beneficiaries or a fixed term not to exceed 20 years.
The payment out to you and/or other non-charitable beneficiaries each year will vary—if the trust assets increase in value from one year to the next, the payment amount will increase; if the value goes down, the payment amount will decrease. The goal is to select a payment rate that will allow some growth in the value of the trust assets from year to year so that the payments grow, thereby creating a hedge against inflation over time in what you are receiving from the trust.
When the trust term ends, whatever remains in the trust is distributed to the charities you have named in the trust agreement.
For more information, please call us at (502) 489-3533 or toll free in KY at 1(866) 489-3533.
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.